Much of the online content about passive income describes it in a way that makes it almost sound too good to be true, like a myth. Think of famous investors, writers, musicians, speakers, business people, and actors. Many famous, rich people are no longer trading their time for money (active income) and are making passive income from streams they created years ago.
Some examples include blogs, rental properties and laundromats. It can also be generated through more ‘modern’ means like online ventures, peer-to-peer platforms and brick and mortar businesses. Passive income is not a myth and is commonly created through traditional means of generating passive revenue such as stocks, bonds, and passive financial investments. In that case, you are working to build a passive income blog for someone else, while you invest your time and physical presence to make an hourly or flat rate. If we took the example of blogging again, in the case of active income, you would be working on your boss’s or client’s blog in a 9-5 format job, or as a freelancer. So, if you worked very hard to build a passive income blog by copywriting, and it is making you $5,000/month after two years, you can reap the benefits of your hard initial work for years to come. If you put in the initial time and effort to build a passive income stream, it can provide you money while you are playing with your kids, taking the day off, are on vacation or even while you are sleeping. However, once it is productive, a passive income can provide income at any time of the day. Usually an important amount of time and or money is required to build a successful passive income stream. It can be produced by financial investments or passive businesses ventures that produce ongoing recurring revenue. It may take an important time or financial investment to set up, however, passive income can provide ongoing, non-active income for years. Passive income is a steady stream of revenue that does not require active presence to produce. However, if you get laid off, in most cases the income stream disappears. It provides a sense of “income security” and can be a great way to make money to provide for yourself and family on an ongoing basis. Making active income is the most common way for people to earn an income. If you are sick or go on vacation, you may not get paid. If you are absent one day, you may not get paid. If you are making active income working for someone else, theoretically, you have to wake up in the morning, go to work, and complete tasks throughout the day for your boss and colleagues. Active income can be produced by a 9-5 job, working per-project, based on active commissions or sales. Getting paid an hourly rate, a per-project rate or a flat fee and trading time for money is an active income. Definition of Active IncomeĪctive income requires physical presence and time in order to produce revenue. Keep reading to learn more about the difference between passive and active income. So for example, those making active income are trading time for money based on an hourly rate, whereas those making passive income do not need to physically be present to produce that income. Active income requires physical presence and time in order to produce revenue. Passive income may take an important time or financial investment to setup, however, it can provide non-active income for years. Passive income is a steady stream of income that does not require active maintenance.
The biggest difference between the two has to do with how time is traded for money. This is the ultimate passive income 101 guide for beginners! Most people make active income, but aspire to make passive income.
0 kommentar(er)
